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2020 Dairy Margin Coverage Enrollment Down 19 Percentage Points

Sign-up for Dairy Margin Coverage (DMC) insurance for 2020 is down by 19 percentage points. That’s not surprising given the low likelihood of a payout this year, says Michael Nepveux, an economist with the American Farm Bureau Federation.

Enrollment in 2019 was made by 23,255 dairy operations, or about 82% of those eligible. They covered about 180 billion pounds of milk. For 2020, the DMC enrollment was just 63% of those operations enrolled last year, and they covered just 114 billion pounds of milk, says Nepveux.

“Partly driving the decline is the brighter economic outlook for dairy in 2020,” he says. Because of higher milk prices, expected to average more than $19/cwt in 2020, payouts are likely limited. Last year, milk prices hovered in the $15 to $17/cwt range.

“Even so, farmers are enrolling in the program, either at the free catastrophic coverage level, or at higher levels if they elected for the five-year lock-in option,” says Nepveux.

About 28 billion pounds of milk have been enrolled at the maximum, 9.50/cwt coverage level for Tier I production, which covers the first 5 million pounds of a farm’s production. Another 69 billion pounds of milk was covered at the $4/cwt, catastrophic rate for Tier II production.

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The mission of Farm Journal's MILK is to connect with large-dairy producers—those with 500 or more cows—and provide them with the information and resources they need to run their operation and continue to expand opportunistically.